Author: Signzian

How do banks digitally verify your online identity?

Posted on | by Signzian

Data breaches and identity fraud continue to be a primary security concern for banks and fintechs . They have harmful financial ramifications for banks. They can also damage the reputation of institutions around the world. As technology advances so do the fraudsters’ methods of theft and deception. Banks need to provide online identity verification service to their users to fulfill regulatory obligations and manage risk.

First, banks have to ascertain that you are who you claim to be. Second, they have to determine that you aren’t a terrorist or involved in crimes like money laundering.

This first step in the traditional KYC process in banks is manually verifying the identity of a customer. This could prove to be the weakest link in a bank’s KYC process. Why? Because it is the most vulnerable to human error.

Fulfilling compliance obligations like Anti-Money Laundering (AML) checks & Combating the Financing of Terrorism (CFT) is not easy for all the entities. Common hurdles are:

  1. A lack of resources
  2. Negative effect on customer experience
  3. Maintaining strict standards of data security

Online identity verification is a suitable solution for all these problems. It fulfills regulatory requirements and provides a secure and seamless user experience. The method is efficient and can easily practice robust data security.

Transitioning to Online Identity Verification

Total identity fraud losses reached $16.9 billion (USD) in 2019 according to Javelin’s 2020 Identity Fraud Survey. It is an annual comprehensive analysis of identity fraud trends. To prevent the instances of such crimes, financial regulatory authorities are setup. Examples include the Financial Action Task Force (FATF). Also, local regulators have set up KYC and AML compliances that businesses are encouraged to adhere to. These regulations enable businesses to carry out proper due diligence for their customers. This can be easily done by properly analyzing customers’ documents to verify their identity. This also helps reduce the probability of fraud and scam. This KYC procedure was mostly done with in-person verification (IPV) by banks, financial institutions, and government offices. However, this was a time-consuming ordeal. Currently, the process is seamlessly done with the help of AI driven online identity verification systems.

Now you can conduct your business via your computer and cell phone. In the meantime, the bank or business representative can authenticate your identity. It can detect stolen personal identifiable information and forged synthetic ID documents. This can be done with technology like image forensics.

Capture, Extract, Verify, Screen, Result

How does it work?

  1. Identity documents are uploaded in real-time. The software detects the document and extracts relevant information from it using AI-based OCR extraction.
  2. The data is then analyzed to detect fraud. Next, the name is screened. This determines if the individual poses higher risk from a Money Laundering or Reputation Risk Perspective.
  3. Once the checks are done, a result is procured within minutes.

Document Verification

Detailed customer attributes can be verified through government issued identity cards and documents. They can be a permutation or combination of the following:

  • Personal Credentials (Name, Number, Age, Date of Birth, and more)
  • Nationality & Immigration Status (Residence Country, Place of Birth, Sponsor, Citizenship and more)
  • Documentation for Demographic Information (Tax Numbers, ID Number, Birth Certificate Number, Domiciles and more)
  • Employee Data & Employer Registration (Employer ID, Year Of Registration, Permit Type, Invoice Details and more)

The types in which these can be falsified are:

Illegitimate documents: These documents are completely fake. They consist of characteristics like missing holograms or other set standards. These form the essential parts of a legitimate version of that document.

False documents: This document is originally owned by another person. The fraudster tries to utilize it to authenticate himself.

Modified documents: This signifies an ingenious document which has been altered. This is where the fraudsters change the font and writing style to manipulate the system.

The online identity verification software can distinguish between all sorts of duplicate documents. Ex: fake, illegitimate, and counterfeit documents. The digital document verification is about 98.39% accurate. Much more precise than traditional manual document verification. It also saves time and resources, allowing customers to verify themselves in the comfort of their homes and offices within a few seconds.

Databases & negative lists

The next step after document verification is a background check for AML compliance. A name is screened against multiple sources and databases to reveal anything suspicious or risky. The sources can be:

  • Government Databases

A person is accurately identified by tallying information on their ID and publicly available government databases. A PAN card database is maintained by the central government. Aadhaar data is centrally based, with the central database resting with UIDAI. For entities, databases exist like the Registrar of Companies maintained by the Ministry Of Corporate Affairs. There are databases according to profession for Chartered Accountants, lawyers, government officials etc.

  • Negative Lists

Negative database APIs are used to see if the name appears on any black lists.

  • AML/ CFT

As per Reserve Bank of India guidelines, banks are required to ensure that before opening any new accounts, proposed customers do not appear in the United Nations’ List under Security Council Resolutions (1267) and the terrorist lists circulated by RBI. Other lists include Interpol Most Wanted, Central Bureau of Investigation, Lists issued under other Resolutions by the United Nations. The FATF blacklist or OECD blacklist is furnished by the by the FATF of the Organization for Economic Co-operation and Development (OECD) from 2000, and highlights the countries which OECD judges to be non-cooperative in the global initiative against money laundering and terrorist financing, dubbing them as “Non-Cooperative Countries or Territories” (NCCTs).

  • Sanction lists

Financial sanctions form a crucial aspect of the global fight against financial crime and are harnessed by governments across the globe to restrict or prohibit trade with foreign targets which are involved, or suspected of being involved, in illegal activities. Governments and financial authorities globally maintain a diverse range of targeted sanctions lists. An example of a sanctions list includes the United States’ Specially Designated Nationals and Blocked Persons (SDN) List.

Some other examples include:

UN Security Council Sanctions

The Security Council maintained by the United nations can authorize action to maintain or restore international peace and security under Chapter VII of the United Nations Charter. Sanctions measures, under Article 41, constitute a wide range of enforcement protocols that do not involve the use of armed force. Internationally, these sanctions also constitute AML/CFT regulations.

Her Majesty’s Treasury Sanctions List

The HM Treasury Sanctions List possesses the demographics (and other identifying information) of individuals/entities who are subject to UK regulations. Those sanctions comprise freezing of assets and market access restrictions — these are in tandem with UK AML/CFT policy. They are designed to curb criminal behavior from regimes around the world.

Bureau of Security & Industry

The Bureau of Industry and Security (BIS) is a security agency under the jurisdiction of the United States Department of Commerce. This organization specializes in issues involving national security and high-level technology. The primary objective for the bureau is helping stop the proliferation of weapons of mass destruction, as well as enhancing the growth of US exports.

Interpol Most Wanted List

The International Criminal Police Organization, commonly known as INTERPOL, is an international organization that facilitates worldwide police cooperation and crime control. Headquartered in Lyon, France, it has seven regional bureaus worldwide and a National Central Bureau in all 194 member states, making it the world’s largest police organization.INTERPOL maintains a most wanted database and this can contain millions of records with information on individuals such as names and fingerprints; stolen property such as passports and vehicles; and weapons and threats such as firearms.

Central Bureau Of Investigation

The Central Bureau of Investigation (CBI) is one of the primary investigating agencies of India. The organization falls under the jurisdiction of the Ministry of Personnel, Public Grievances and Pensions. The agency is renowned for investigating several economic offenses, special crimes, charges of corruption and other high-profile cases. Similar to Interpol, the CBI database also contains criminal information pertaining to AML/CFT data.

Signzy adheres to the above mentioned global sanction lists along with hundreds of other databases, making our products and solutions globally compliant.

  • PEP (politically exposed persons) lists

In financial regulation, a politically exposed person (PEP) denotes an individual who has been entrusted with a distinct public function. A PEP ideally is a higher risk for possible involvement in bribery and corruption by virtue of their position and the influence that they may possess.

  • Panama Papers

11.5m files from the database of the world’s fourth-biggest offshore law firm, Mossack Fonseca, were leaked in 2016. The International Consortium of Investigative Journalists (ICIJ) revealed with the documents how the rich and famous exploited secretive offshore tax regimes. With AI-based screening profiles from the data can be cleansed, and curated, revealing entities with negative information. A risk profile can then be created from the information.

Why is such a list important?

If a client possesses an offshore company, it’s quite possible that they are doing so to avoid taxes — or, even worse, so they can hide the flow of potentially illegal money. This could result in non-compliance and reputational risk. Financial institutions can decide if they want to accept the customer. If accepted, the client would be placed in the high-risk segment, with advanced due diligence.

Adverse Media & Negative news

This can include going through TBs of data from online sites, printed media sources to expose any negative news on the entity or individual.

Benefits of an Online Identity Verification system

  • Automated document forensics with accurate results
  • Real-time analysis with results within seconds
  • ID verification for one or more types of the connected device (mobile, tablet, kiosk, PC)
  • Facial recognition to match the photo on the ID with the person presenting the card
  • Faster enrollment using automatic form fill/pre-fill using ID data
  • Integration with back-office for audit optimization

AML at Signzy:

WorldWatch Risk Screening APIs: This API covers background checks and risk screening through AML/CFT, Politically Exposed People. It also conducts Negative Media checks for individuals as well as entities globally. This data is refreshed every 24 hours. This is because the search results are the most up-to-date information. The data is available from over 8000+ watch lists and sanctions sources globally. The APIs also include monitoring facilities to receive regular alerts.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

 

 

Investing In Mutual Funds- Volatility & The New Digital Experience

Posted on | by Signzian

Months into the pandemic, we have adjusted to social distancing and self-quarantine norms. The past few months were harsh and difficult and we have come a long way but the future still looks murky.

With unemployment rates at a high, people are already under the fear of pay cuts and layoffs. Personal finances have taken a massive toll on people.

While news of increasing recovery rates can be considered as a silver lining, there is no doubt that the economy is struggling to stay afloat.

Market volatility is something that an investor deals with on a regular basis. But, the ongoing situation has made them scratch their heads over the future of investments.

Mutual Funds In Times Of Market Risk — Still ‘Sahi hai’?

Mutual Fund companies have been active with their outreach programs for quite some time now. In 2017, the Association of Mutual Funds in India (AMFI), launched a campaign under the tagline ‘Mutual funds Sahi Hai’ to educate people about mutual funds. This was a part of the investor awareness outreach program. The aim of the campaign launched was to bust myths and encourage investors to opt for mutual funds as their potential investment options.

While the campaign did help gain the trust of people and brought around 50 lakh investors in a single year, Mutual funds are still considered risky and hard to understand by a huge number of people. And uncertain times like this further add to the fuel.

The nationwide imposed lockdown, the uncertain future of an economy already in turmoil, and the volatility of the markets have contributed to growing concerns of investors. Should they invest more, sell-off, or wait till it gets normal?

Market Volatility: A Minor Setback In The Long Term Picture

Reports indicate that Mutual Funds investors must not panic as the ongoing situation will not last forever and things will ease out eventually.

Indian Institute of Technology-Hyderabad did a study on Mutual Funds which said “Nonetheless, there is no need for Mutual Fund investors to panic as long as the net asset value (NAV) of their investment drastically does not die out in this ongoing first quarter of FY 2020–21,”

While the economic slowdown may plant seeds of doubts in investors’ brains, it is important to keep one’s cool and look at the long term prospectives. The markets will eventually start giving better returns.

Reports by Arthikdisha show that the mutual fund industry has proven to be effective in wealth creation. With an average return of 12 to 15 per cent in the past 10 to 15 years, investors can rely on long-term returns.

Experts tell investors to focus more on their financial plans than the changing demographics of the market. This would help them make wiser decisions about their investments.

Wealth Creation In Crucial Times Through Investors’ Glasses

According to AFMI, the contribution of SIP rose to Rs 100,084 crore in the fiscal year 2019–20 as reported by Bloomberg Quint. In a highly unpredictable market, investors look for a safer route for wealth creation. The rupee-cost averaging through a SIP in uncertain markets reaps better long-term benefits. As the purchase is made consistently for a greater period. Thus, on average providing lesser risks and better returns to the investors. Investors aim to diversify and balance the risks and uncertainties of the market. Hybrid funds, STP or Systematic Transfer Plans, Large-cap funds help them do that.

For a long time, completing formalities involved the investors to fill out lengthy forms. The Know Your Customer (KYC) process required investors to visit the bank, produce the necessary documents and wait in queues. While many organizations did try to ease out the process, in-person verification was a must. The onset of the pandemic posed its own set of challenges to both the institutions and the investors.

How Adaptive Have Financial Institutions Become?

The outbreak of the virus continues to trouble citizens across the globe. Many institutions have adopted precautionary norms to function in a safe manner. Many fund houses have allowed employees to work from home in containment areas. Those working in offices are taking mandatory measures. Regular temperature checks of employees and visitors are one such measure. Institutions use infrared thermometers for this. Regular hand washing, availability of sanitizers is a must. These measures ensure responsible communication in times of crisis.

Ensuring An Efficient Digital Experience

In the wake of the crisis and a nationwide imposed lockdown, several mutual fund houses moved the KYC (Know Your Client) procedure online. While some representatives still went to the client’s house to get the in-person verification (IPV) done, others allowed the clients to get the IPV done through a video recording.

However, each fund house may have different procedures making the situation unfavorable and confusing for the people. To standardize the process, the Securities and Exchange Board of India (SEBI) released a clarification on the KYC norms.

  • The intermediaries carry out the online KYC procedure through their apps. Along with the bank and PAN details, personal details can be recorded. This includes the customer’s photograph, name, address, the mobile number.
  • Video IPV can be done through the apps while the clients can upload a signed cancelled cheque online.
  • As far as verifications are concerned email and mobile numbers can be verified by OTP generation. Aadhar and PAN can be verified through UIDAI and income tax department respectively. Digilocker can also be used to verify documents. The investor can then digitally sign the KYC form and submit it.

How Signzy is helping build the future?

Through our tech-enabled solutions, Signzy intends to offer financial institutions futuristic operational assistance. Our Algorithm Risk Intelligence aims to provide a satisfactory background check. Digital real-time KYC, Digital signature for KYC, Biometric signatures, Digital contracts are some of the key features of our products. Through our AI solutions, our system is equipped to meet strict data security requirements to help financial institutions function smoothly.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

 

Indian PDP Bill’s Impact on Lending

Posted on | by Signzian

As laws to protect personal data are debated, rejected, and adopted across the globe, individuals are becoming aware of their data rights. Privacy of data has become a source of company competitiveness with consumers seeking to engage with organizations that give them a semblance of control over their data. If that wasn’t enough, India is set to pass a regulation governing personal data this year.

The context for compliance

Inferring from the soon to be passed Personal Data Protection Bill 2019, lending is an area that is bound to be hit by a combination of compliance clauses. Data is central to the lending operation. Lenders collect, process and analyze a host of customer data throughout the lifecycle of a loan. This helps the loan granting entity to gauge risk and offer personalized services adapted to the individual’s needs.

To remain compliant these data fiduciaries must ensure they understand the compliance norms and the rights of the data principals. This blog explores the data rights that translate into areas of compliance across the lending process.

The primary rights which affect compliance for lenders are explained below:

 

These rights have a bearing on the different types of data collected at different steps of the lending process. Although the RBI and SEBI are yet to release separate, detailed guidelines for the fintech sector, here is my take on the PDP’s impact on compliance:

  1. KYC process

The preliminary step of any lending operation is the Know-Your-Customer (KYC) process. The basic documents required for this are (a) Identity proof and (b) Address proof. This is already a consent-based process.

The clauses that have some bearing on this step are:

  • Storage Limitation: after the loan has been repaid, the data principal can request the erasure of all the KYC data.
  • Data Portability: with eKYC and VideoKYC being adopted, automated processing is becoming common. The data fiduciary must keep a copy of the data in case it is requested by the data principal.

2. Credit Underwriting

A number of data sources are inspected as a part of the credit underwriting process. These can be divided into:

a. Public sources

This includes news articles about a customer, public social media profiles etc. Since this category of personal data is public, lenders do not have to worry about non-compliance.

b. Private sources

There are a number of private sources that can be scraped for credit underwriting. Here we discuss a few of them that bring up the concern of compliance.

i. SMS reading

This considerably new method of credit assessment would require explicit consent for processing. It is yet to be determined whether consent would have to be taken from both parties associated with the SMS exchange.

ii. Bank login based pull

To evaluate a person’s financial history, lenders perform a bank login based pull. Apart from the fact that explicit consent is required to access this data source, the question here is whether this would be a breach of the data fiduciary’s (bank) trust and if consent would be required from them as well.

iii. Email login based pull

Sometimes applicants are required to provide login credentials to a data source such as a personal email account. Till now explicit permission was usually sought for this to follow through, but not always. With the bill in place, email login based scaping would need to be 100% consent-based.

3. Credit Bureau Access

To ensure effective debt management, lenders share a customer’s personal data with credit bureaus and other third parties when servicing a loan. The transactions, details of the companies involved and justification for the data transfer must be explained to customers. Although credit scoring is a “reasonable purpose exception” in the bill which allows personal data to be processed without consent, it is not certain if it grants an exception from the right to data erasure. The storage of personally identifiable information (PII), implies that a data principal can request it be completely erased.

4. Non-traditional types of data

Bureau companies were previously mandated by the Credit Information Companies (Regulation) Act (CIC Act), which doesn’t allow credit bureaus to use alternative data in generating credit scores. Only loan account data from the core banking system could be used by the credit bureaus. This included default history, size of defaults and repayment time of loans. With an increasing number of data sources, it is yet to be determined if alternative sources are allowed under the new bill. And, how compliance norms would apply to their processing. Potentially, such sources could be:

a. Google Places/ Yelp

b. Payment processors

c. E-commerce platforms

d. Shippers

Privacy by design

The bill mandates that every data fiduciary build a robust privacy system for storing and processing of personal data. A data protection system should be implemented from the outset. This “Privacy by Design” policy is a mandatory requirement and must be certified by the Data Protection Authority. The policy is to be published on the organization and the authority’s website.

Penalties

Non-compliance is liable to a penalty. This penalty could go up to 15 crore rupees or 4% of a data fiduciary’s total worldwide turnover of the preceding financial year, whichever is higher. It is thus imperative for fintechs and banks to start prepping for these compliance measures.

Dissent from lenders

The bill in its current form recognizes all forms of personal financial data as ‘sensitive personal data’. This definition of sensitive personal data in the bill is restrictive and brings up concerns for lenders. The Digital Lenders Association of India (DLAI) had submitted recommendations to reduce potential restrictions that the bill enforces. To make the lending process less prone to frauds, lenders need to access aspects of consumer data. This includes credit history, financial position and some alternative data of customers. With the current bill in place, this would become tedious. While compliance norms are necessary for personal data protection, such a definition will inadvertently hurt the lending operation.

Conclusion

The banking and fintech industry needs a clear compliance checklist. There is a dearth of understanding when it comes to how the current bill will affect compliance for data-centric processes like lending. This is because specific norms have not been released for the fintech space yet. The RBI and the government will need to come up with guidelines for the sector to ensure that function and compliance are not at odds.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

 

Automating Online KYC The Intelligent Way Using IPA

Posted on | by Signzian

KYC or Know Your Customer has been a crucial process in the banking sector for onboarding customers. However, traditional KYC involved several manual steps for the unique identification of the client. These steps were time-consuming, tedious and added to the expenses of the institutions. A report by X-Infotech states that banks across the world spend around $500 million yearly on KYC compliance. Financial Institutions (FIs) have also been additionally fined over $12 billion over violations of KYC and AML (Anti-Money Laundering) regulations since 2009. [1]

In a world where entities are ramping up online, digital authentication of one’s identity has become a necessity. With the pandemic taking the contactless process to a different level, institutions started to adapt themselves to a more efficient and cost-effective solution- Online KYC.

Online KYC has helped institutions verify the identities of their customers while at the same time providing them with a simple, secure, and compliant solution. It has provided customers with ease of moving through and completing the long process within minutes. In this blog, we discuss the challenges and benefits of the process.

Scrutinising Initial Challenges Of Digital Onboarding

Traditional onboarding involves several steps for the unique identification of the client. For a long time, in-person verification of the client’s identity was a must to ensure authenticity. Visiting the bank branch, face-to-face meetings and manual verification of documents was time taking. Along with this, it also left room for errors and a higher client dropout rate.

A lengthy onboarding process burdens the financial institutions. Online KYC helped make this process faster, secure and more efficient. However, there were many initial challenges that delayed the shift from offline to online. Some of these challenges included-

Lack of compatibility and compliance-
One of the major challenges of digital onboarding is the fact that users might have various devices with different internet bandwidth. In areas of weaker internet connection, onboarding can prove to be challenging. Different institutions can have their own set of regulations and specifications. This disparity and lack of standardization make the process confusing for customers with many accounts.

Inconsistency in recording data-
Outdated recorded data can prove to be a hurdle in the verification process. Performing accurate, efficient and verifications is central to maintaining a solid customer base and establishing a brand as a trusted service provider.

Privacy risks-
Verifying the information by a single FI and then using the same with others seems an efficient plan. But this also puts the information at higher cyber risk. Both global regulators and stakeholders expect that this will increase customer risk. Basic credentials and personal data on credit history involves many security risks. This might expose personal data to the very real threat of digital hacks.

Fraudulent-
Scamsters posing as officials have duped people of money. They usually do it by gaining remote access to the victim’s mobile phone screens through an app. They hack into the victim’s account by telling that their KYC needs validation.

 

Curbing Hurdles And Adapting To A New Way Of Banking

A report on RPA by Capgemini states that onboarding takes 24–30 days on an average. The same report also states that 9 out of 10 customers were not satisfied with their bank’s KYC processes. [3] As a result of which, they had to switch banks. IPA (Intelligent Process Automation) solutions can help FIs optimize their operations. These will help in reducing the costs and improve the accuracy of data verification. Emphasis on online KYC regulations ensures businesses with an efficient experience.

  • According to a study by CACI, by 2022 customer physical visits to their retail bank branches will drop by 36%. Mobile transactions will also see a rise of 121% in the same period as reported by x-infotech. The same report also estimates that 88% of all interactions will be mobile by 2022. [1]
  • Financial institutions are now moving towards remote and online verification processes.
  • Automated biometric verification and video conferencing tools provide a secure and efficient alternative to the traditional KYC method. A smooth, hassle-free client experience helps institutions grow their revenue.
  • A report by Acuity Market Intelligence estimates that 1.9 billion bank customers will adopt biometrics for financial services by 2020. [1]

Combining AI + RPA to Transform Onboarding using IPA

Financial Institutions have now started to address this anomaly and have started to adapt themselves to the ever-evolving technology. This helps them make the process efficient for both themselves and their clients.

  • IPA blends AI and RPA to create solutions that perform unstructured tasks efficiently. It shouldn’t be viewed as completely different from RPA (Robotic Process Automation) but rather an upgrade to it.
  • IPA is capable of handling complex processes to provide a seamlessly integrated framework. It uses image recognition and Optical Character Recognition (OCR) to understand, recognise and process the data according to the required task.
  • Introducing IPA (Intelligent Process Automation) can help cut down the probability of error and manual efforts of conducting repetitive steps.

Here is a list of benefits of IPA and how it is transforming the KYC process-

A smooth client onboarding solution

The faster process can allow financial institutions (FIs) to add value to their client services. The consistent and smooth customer experience can benefit them to transact or trade. eKYC reduces the manual efforts spent on collecting the client’s documents. Faster client onboarding proves to be an effective way of revenue generation.

Reduction in operational time and cost

An automated and standardised process reduces the inefficient steps in onboarding customers. Institutions can review and store the data. This reduces contact points and client drop-out rates. Capgemini reports that a centralised source could help the financial institutions save crucial back-office hours. It also helps and reduces costs by up to 50%.[3]

Increased operational accuracy

Manual entry of data can often lead to errors. This can amount to application rejection and loss of office hours and resources. eKYC registration online eliminates that risk. Accurate and secure storage of data helps combat the issue.

Better regulatory compliance and a holistic digital transformation

Financial institutions can harness better relationships with their clients. The details are up to date and transparent. This leads to better business partnerships and networks.

Quick ROI And Employee Satisfaction

Capgemini reports that the return on investment (ROI) on RPA implementations is as short as six to nine months [3]. Reduction in the manual processing of data helps in the reassignment of higher value tasks to the back-office staff. Allocation of new and improved objectives improves the work-life balance of employees.

How is Signzy providing a solution to these challenges?

Signzy’s AI-based solutions offer a simple, secure KYC collection process to financial institutions. We provide digital onboarding services to over 70+ financial institutions including 7 major banks in India. After implementing our solution, our clients have seen-

1. 75% reduction in operational costs,
2. 66% reduction in customer dropout
3. 3x increase in sales

Here are the overall benefits of our digital onboarding products-

Better compliance and compatibility-
Our services are compliant with the latest regulations. Through our smart AI-enabled onboarding solutions, we offer our clients to customize their workflow according to their needs. In addition, these solutions are compatible with most user devices. They have proven to be effective over various platforms, browsers and low-internet scenarios. This offers the users a seamless onboarding experience. Customers receive notifications about the required documents for the verification beforehand. Clients can schedule a time for verification through VideoKYC.

Improved BackOps, better efficiency-
Our Patented AI reduces 90% Backops effort. This makes the onboarding of investors effective. The details of the customer are extracted from the identification document uploaded by them using advanced extraction services. These details are then verified against forged data using Signzy’s proprietary technology.

Reduction of TAT-
The traditional method of KYC involves the submission of a lot of documents. Followed by processing and verification by several departments and their officers. This can be a time-consuming process. The automated process of VideoKYC saves a lot of time. Real-time verification of documents reduces the hassle of collecting photocopies.

Better background checks-
A unique set of APIs does comprehensive credit checks against potential frauds. Through advanced AI technology, we have been on the frontline of providing credible background checks. Some of which, for instance, include-

  • Document recognition- Real-time PAN verification extracts the data from the displayed ID proof by the customer. At the same time, it verifies the data against digital forgery, frauds or risks.
  • Video liveliness check- Video forensics detects pre-recorded videos and potential spoofs.
  • Image and video forgery- Face on the ID is matched against the face in the video and a match (or confidence) percentage is shown.

Best-in-class data protection and privacy-

The data shared on our platform is end-to-end encrypted. Our platform prevents leakage of data and malicious activities by any third party. Our video conferencing tool allows recording and the safe storage of calls for call audits. Any breach of privacy can be understood during auditing.

Conclusion

Today, a lot of financial institutions are heading the automation way. Yet, there are still some exploring the scope of it. Ever-changing regulations and policies in the KYC process appear as a hurdle. This creates challenges for both financial institutions and their clients. A standardised process will help FIs with better client onboarding solutions. While such problems may continue in the future, IPA solutions hold the potential to combat such issues. Digital Onboarding is simple and secure and at the same time provides a seamless customer experience.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

 

Video KYC

Video KYC: A game-changer for Non-Banking Sector

Posted on | by Signzian

It isn’t just the finance and banking sector that is going digital. Every aspect of our lives, every industry we can fathom is undergoing a digital transformation. From the comfort of one’s home, a car can be rented, a fiancé found, a house booked, and a loan taken. The common prerequisite for each of these pursuits is verifying that the person is exactly who they say they are. (A little more than) a click of a button can authenticate the user with the help of a remote id verification service. Irrespective of workflow, the Know-Your-Customer (KYC) process is shifting to the digital for each step, end-to-end.

The Need for online ID verification & Video KYC

With the COVID-19 pandemic forcing everyone into their homes, there is a growing need for an efficient, cost-cutting paperless system. A system where the person seeking the service never has to come in contact with the organization providing it.

The problem NBFCs are facing

Due to the privacy judgment by the Supreme Court, Non-Banking Financial Companies (NBFCs) are not mandated to use Aadhaar eKYC as a means to simplify onboarding. This creates a gap for a simple, secure, and compliant solution.

The Precedent: Video KYC in India

On 9 January 2020, the Reserve Bank of India (RBI) approved Aadhaar-based video authentication as an alternative to e-KYC. Now banks and other lending institutions regulated by the RBI can adopt a Video-based Customer Identification Process (V-CIP). It is a consent-based alternative method of id verification for customer onboarding.

The amendment to the KYC norms are a great way to push digital financial inclusion. The benefits of VideoKYC for banks are often discussed. But, what many fail to see is the future VideoKYC holds for non-bank institutions.

Non-banks, whether performing a financial function or not, can adopt VideoKYC as a solution to all their onboarding challenges. This blog will discuss the different industries that can adopt VideoKYC. It will also delve into the regulatory paths that exist, and those that can be potentially created to include NBFCs and non-financial institutions in the VideoKYC revolution.

The Potential Paths of KYC in India

Video KYC can fill in the gap of a simple, secure, and compliant solution for NBFCs. It is also useful to various non-financial institutions. It boils down providing a faster solution for all those sectors that erstwhile used electronic form filling.

RBI is the regulator of banking in India. Currently, different bodies regulate different finance related aspects carried out by non-banks. The future can only hold one of two options:

  1. The potential of non-bank financial institutions regulated by the RBI
  2. The current situation of non-banks not regulated by the RBI but other specific authorities

Either way, VideoKYC can be freely used by the following without any regulatory roadblocks:

Regulated non-bank institutions

The following 4 functions are financial in nature and the non-bank institutions performing them are currently regulated by different authorities.

  1. Asset Management Companies (Regulated by the Securities and Exchange Board of India): The VideoKYC onboarding customer journey allows full KYC, AML/CFT and authentication resulting in significant reduction of costs. Apart from individuals, it can also be beneficial to onboard non-individuals such as SMEs. The solution eliminates back and forth to reduce onboarding time.
  2. Insurance (Regulated by the Insurance Regulatory and Development Authority): Technologies such as a livliness check and digital fraud detection enable an enhanced user experience and reduces digital risk in the insurance arena.
  3. Lending: Using VideoKYC for the SME lending process can result in faster decision making and improved user experience. It can also be used for other forms of lending by NBFCs such as individual retail lending.
  4. Payments: KYC had been a primary barrier for mobile wallet companies who were relying on Aadhaar to onboard customers. They had to resort to cumbersome traditional processes. Video KYC can streamline the clunkiness of this experience.

Non Financial institutions

  1. Telecom industry: Authentication of a user is imperative to be issued a SIM card. Till now a physical visit to the service provider was mandatory to activate the SIM card. With the safe, contactless option of VideoKYC now in existence, the telecom industry should switch to this method of id verification.
  2. Rental/shared vehicle economy: Players like Ola Money which had a firm base of users using their wallet to pay for cab rides, had to perform the full KYC ritual to keep their accounts operational when eKYC was banned. With RBI accepting Video KYC as a potential alternative for digital KYC in 2020, Signzy’s Video KYC technology has the potential to provide the solution.
  3. Co-working spaces: Co-working spaces have been cropping up in the past few years. For the safety of all those working under one roof, KYC is done. Like any other long-drawn out process, VideoKYC can help reduce the time it takes to begin working from one’s new work place.
  4. Co-living and accomodation rentals: Driven mainly by urbanisation, the lack of affordable housing and technological innovation, co-living is gaining popularity. Documents may take time to be verified due to obstacles like blurred images or the possibility of forgery. A trustable solution must be used for the peace of mind of all tenants and VideoKYC is the best solution in the foreseeable future.
  5. Consumer goods rentals: Rental companies also follow the same approach where the owner never meets the buyer. In order to authenticate users, KYC collection and id verification is a must. But traditional forms of KYC collection can be cumbersome and require a lot of manpower, time and infrastructure. Just like every other paragraph in this blog, we cannot stress enough how much easier VideoKYC can make this.
  6. Educational platforms & exams: Although not used as widely as other sectors yet, with homeschooling now a forced practical reality for many students worldwide, VideoKYC can be used to onboard students to a new platform for learning. It can prevent cheating in competitive exams ensuring the person taking the exam isn’t someone else.
  7. Gaming: Cybersecurity and fraud are a huge concern for the gaming world. With money at stake, KYC is important to detect and shut down fake accounts and fraudsters.
  8. Dating and matrimonial sites: Trust is the foundation of any relationship or marriage. To get to that stage the user must trust the platform they are using to find their significant other. VideoKYC can ensure all suitors are exactly who they claim to be online.

But, why exactly are we calling Video KYC the future? You can find out through this blog.

Whether you are a bank or a non-bank, VideoKYC provides id verification solutions for any industry. Signzy’s VideoKYC solution has matured over dialects, browsers and low-internet scenarios. Use our new-age trust protocol to improve customer experience, cut down costs, and simplify onboarding. It will soon become a multi-industry standard. Adopt it to stay ahead of the curve.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

 

Video KYC, How to Choose the Right Video KYC

Posted on | by Signzian

The finance and banking sector is becoming increasingly digitized and globally accessible. Consequently, we are witnessing a sharp surge in the demand for remote identification services. The goal of KYC video identification services is to make life easy for banks and their customers.

The financial institutions of India face a number of issues. KYC and other compliance processes are a couple of them. At present, there are quite a few solutions provided by fintechs for digital transformation in the market. These are stable and secure enough for financial companies to adopt right off the board.

The Need for a Global Digital Trust System

Since the world is getting more and more connected, people today want to access services from the comfort of their homes. When it comes to the identification process, carrying out banking procedures becomes a hassle in these scenarios.

This is where ID Identification comes in. A KYC video identification process allows banks and other financial institutions to verify customers while onboarding them through video over the Internet.

This is an attractive option for financial companies. It eliminates security vulnerabilities and minimizes loopholes. Identity frauds deter our growth as a financial institution and as a nation. This will allow financial companies to build a global network of customers.

Used effectively, KYC video identification can help speed up customer onboarding. And, it helps with KYC/AML compliances. Online video KYC eliminates security gaps by combining human scrutiny with both software and AI and ML-enabled learning.

Use Cases and Applications of Video KYC

Video KYC has started it’s journey across the financial services industry. Institutions like banks, lenders, investor onboarding and ICO’s have shown a great interest in the potential of VideoKYC.

A KYC video identification system can allow all of these organizations to maintain excellent standards of compliance and trust while not compromising on the customer experience.

The Challenges with Legacy KYC Process

Traditionally the KYC process has been tedious and cumbersome in terms of:

  • Maintaining physical documents that occupy space, take time, and utilize manpower.
  • Processing documents offline which brings with it the threat of misuse of documents.
  • Delays in processing the files hamper the customer experience. Usually known as increases in the turnaround time (TAT).
  • In-person verification: Requires the person’s availability and beats the globalization of financial services.

The time and cost involved in the legacy KYC process hamper the efficiency of a banker. You can choose to eliminate this hindrance by using video KYC.

Choosing the right KYC Video solution

There are quite a few solutions available in the market that promise to transform the traditional KYC process and upgrade it. We encourage you to look for these indicators to make sure your investment in a video KYC solution brings maximum ROI.

  • The solution should an offer exceptional face match score. Comparing the following two will help to eliminate the possibility of any fraudulent activity:
    1. Photo identity submitted by the customer, and
    2. The real-time video session.
  • The solution should have AI and ML embedded to detect and eliminate static photographs or pre-recorded videos.
  • The offering should also be able to check the liveliness of the user by carrying out a speech test. This is where the user is prompted to speak a series of numbers or words which is then matched with the audio recorded on the live streaming.
  • The solution should be integrated with video forensics to detect tampering or misuse of any nature.
  • The software should be easy to implement with an API, SDK, and a webcam for video KYC.
  • The proposed offering should have a quick turnaround time and should ideally take only a few minutes to complete the verification process.
  • An added provision of completely automating the video KYC process should also be a part of the solution.
  • The solution is 100% compliant with the local regulations.
  • The proposed solution can reduce overheads and backlogs in operations by upto 70%.
  • Installation and usage is hassle free for most users as the solution is platform agnostic and follows a Plug-n-Play approach.
  • A seamless interface provides a superior customer experience for a competitive advantage in the market.
  • A vibrant, engaging solution reduces customer drop-offs by upto 50%.

Paperless video KYC can empower financial organizations and change the way customers are treated and brought onboard.

How Does Video KYC Work?

  1. The customer fills up a registration form on your website.
  2. The customer provides relevant document identities such as National IDs, driver’s licenses or Passports.
  3. A customer verification specialist connects with the customer on video, or an automated process is triggered for video KYC.
  4. Using their smartphone or a webcam, the customer can be directed through the video KYC process in a seamless manner.
    (To completely eliminate any chances of error, along with AI and ML, facial recognition technology can be leveraged here.)
  5. Once the documents are verified and the user is identified over a live video, they are sent back to the bank’s website. Next, the user can submit the process of onboarding.

Advantages of Video KYC for Financial Companies

Financial institutions stand only to gain from Video KYC solutions.

  • Save time —  Video KYC speeds up the onboarding process significantly. It allows you to process more applications at the same time and increase revenue. Also, you eliminate the need to train your staff on identity verifications because you have an automated system helping you with it.
  • Save money — Identity frauds can cost you money. Video KYC procedures save time and keep fraudulent people at bay.
  • Compliance — Meet the necessary Anti-money laundering and Know Your Customer compliances with a video KYC software that already complies with the Indian regulations.
  • Improve security — Video KYC software solutions are powered by AI, ML, and facial recognition technology. These are far superior and secure alternatives to traditional KYC processes.
  • Gather data — With video KYC, you can record all conversations and keep this data for future reference.

Video KYC Solution from Signzy

With the KYC video solution we offer, you can:

  • Match the provider of documents with their identity on the documents through face match algorithms.
  • Build trust with the customer through a live video feed.
  • Verify the actual documents with forgery detection algorithms.
  • Trust the document provider with algorithmic risk intelligence.

When our first client used our video KYC product for customer onboarding, they achieved jaw-dropping results:

  • Reduced TAT by 55%
  • Slashed rejections from 9% to 2%
  • Increased sales productivity three times.

Signzy is now completely integrated into the core customer onboarding process of over 15 enterprises in the BFSI sector.

Use our new-age trust protocol to improve customer experience, cut down costs, and simplify onboarding.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

 

Financial Institutions Should Heed Digital Merchant On-boarding

Posted on | by Signzian

Acquirers are always struggling with the cumbersome merchant onboarding process. The need is of an enhanced digital merchant onboarding experience. A platform that is agile. A platform that supports a 100% automated onboarding.

One that incorporates checks for fraud and Anti Money Laundering (AML), digital Know-Your-Customer (KYC), and risk decisioning. Digitizing the process is the solution for faster onboarding and better compliance.

3 Key Problems with the Traditional Merchant Onboarding Process

  • The traditional merchant onboarding process is frustrating and siloed. This means that each linear step is isolated in its functioning. An inordinate delay of about a week could come up to complete the application process. There is no status monitoring process which could track applications end-to-end. In the short term this could choke operational excellence. In the long run threaten business growth.
  • Existing data entry systems used for traditional onboarding are manually-driven and painfully slow. The process is susceptible to human error and can result in squandering of days of time. It could cause rampant inaccuracies in the entered data. The situation is extremely precarious because data inconsistency could prove to be detrimental to user privacy and the reputation of the business. Trust cannot be built in a system prone to error.
  • Merchant onboarding journeys are tedious, long and inconvenient. They stretch across numerous drawn out touchpoints and channels. This leads to excessive service delays lasting up to days or weeks, and poor customer experience. In case of an error the to and fro communication causes further delays.

These key problems thwart any chance of a seamless process. They peak their heads in the following 3 friction points, which slow down and complicate the merchant onboarding journey. This section explains what they are and how the digital onboarding process can solve these issues:

Friction point 1: Manual Form Filling

Data from physical paper applications has to be manually put into the computer database. This requires considerable effort from many physical operators. Significantly reduces errors by eliminating as much manual data handling as possible. This is a common source of error and denied applications. An AI based OCR (optical character recognition) performs extraction at the front-end. It is optimal to reduce time and error. With this, it is now possible to fetch customer information by extracting it from their IDs. The field filling process is also automated. This reduces the mistakes which were made by individuals filling the application. The cumbersome need for manual form filling is eradicated.

Friction point 2: Time-consuming Document Verification

Significant diligence checks and third-party verification is needed to ensure merchants aren’t involved in fraud. The solution must validate the authenticity of documents as part of the onboarding process. When this is done manually it takes huge amounts of time. It is also prone to human error. If additional details are required like court history, there emerges another layer of research. With digitization it is just a matter of ticking the box for another method of verification. Details are then pulled automatically from the Ministry of Corporate Affairs (MCA) database and tallied.

Friction point 3: Risk Assessment/ Underwriting

Information collected in the application paired with a rules-based engine is what decides if an account is approved or declined. The rules-based verification engine determines whether or not a merchant is a pass/fail. According to the required verification needs, data can be retrieved on the merchant very fast. An interactive scorecard or report needs to be made. Organizations generally have access to required data. The question is how do they automate the process and stitch it all together. Risk assessment done manually is arbitrary. But, an automated process has set parameters.

Major Advantages of this Solution

Smoothening over these 3 friction areas results in a host of benefits. They can be boiled down to the following three advantages:

Taking down Time

With automated onboarding abandonment is largely avoided due to the simple process. It cuts through red tape and desk delays. Even in the case of insufficient information, the merchant can be contacted and details clarified without leaving the house. Apart from that, merchant onboarding solutions like Signzy empower a business to create easy real-time processes without sacrificing the risk strategy. A customizable fully automated onboarding process that meets all compliance and KYC regulations can be created with Signzy tools. Whether it’s a straight through process or more complex processes to verify high-risk merchants decisions can be made in real-time. For a merchant, the need to spend hours in filling applications is eradicated. For banks, the verification of documents is expedited with some automation.

Curbing Cost

Digitization with an onboarding solution successfully streamlines the merchant onboarding process to the point where the merchant doesn’t have to even speak to anyone to set up. With manual data entry not required and the time taken to process the applications at the backops drastically reduced, the operational expenses of onboarding come down.

Lighter Labour

A major pain point for the industry is manual work like data entry. The work is often done multiple times. Manual work slows down the process. It can also introduce points of failure in the system. It adds a significant cost to the process. This should not be translated as eliminating people from the process. But, people should concentrate human effort on identifying fraud. Data entry is easily automated. Automation also enables smoother integration between the steps. If data is digital from the start, then the entire process has the potential for automation, especially in the case of smaller merchants. New risk assessment automation, as well as integration and optimization tools, are on the market, so dramatic improvements are already possible.

This story was originally published here

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

 

Simplifying CASA In Banking With Digital KYC

Posted on | by Signzian

Digital KYC verification has made CASA banking really simple. Let’s understand how….
A current account savings account (CASA) is a combination of the features of savings and current accounts. It enables customers to keep their money in the bank. It provides very low or no interest on the current account. For savings accounts, banks provide an above-average rate of interest.. A CASA functions like a normal bank account where funds may be withdrawn at any time.

Most banks provide CASAs to their clients for free. In some cases, a small fee may be levied, based on certain minimum or average balance requirements. A CASA tends to be a cost-effective method for a bank to raise money. This is a more suited alternative to issuing term deposits like fixed deposits (FD). FDs offer higher interest rates to customers.

Financial institutions prefer the use of a CASA as it generates more profits. The interest paid on the CASA deposit is less than on a term deposit, the bank’s net interest income (NII) is higher. Thus, CASAs can be an effective source of funding for banks.

Banks and regulators have focused on eradicating terrorist funding and money laundering. The objective is to prevent financial terrorism related activities. It’s impossible to transfer funds around the world and within a country without using a financial institution. As such, banks have increased their efforts to prevent, detect and report suspicious transactions. These include financial transactions that are connected with money laundering and terrorist financing. Digital banking KYC verification is a critical component to anti-money laundering efforts.

Need For KYC In CASA WorldWide

India

As per RBI regulations on KYC, the objective of KYC/AML-CFT guidelines is to protect banks or Financial Institutions (FIs). This prevents them from being used by for money laundering or terrorist financing activities. KYC procedures also enable banks and FIs to know and understand their clients. This helps in their financial dealings better, and so manage their risks prudently.

KYC is a fundamental part of the banking process. KYC regulations are non-negotiable and non-optional. This applies to retail banking as well as corporate banking,

In simple terms, KYC in CASA involves four essential steps:

  • The customer identity: This can be Individual, Partnership, Sole Proprietorship Firm, Company, or LLP
  • The business’ address: The registered address where business activities are being carried out. For instance offices, factories, depots, or warehouses
  • Statutory registration: The business is compliant with various statutory registrations under RoC, Income Tax, GST, etc
  • The legality of the business: Whether the business is legal as per Indian laws.

The KYC process in banks is elaborate and time-consuming. This is because it involves a lot of documentation, compliance checks, and background verification. The process can take 2–3 weeks to be completed and also imposes an enormous cost to banks and FIs.

Although it is a legal mandate for banks and FIs, conventional KYC methods provide a miserable experience for customers. Banks and FIs have switched to technology to enhance the KYC processes. Ideally, customer interaction and contact is barely needed for KYC. This is due to the fact that most data are available on the public domain. Asking the customer to submit the same data inevitably delays the process.

USA

In 2016, the U.S. government passed a rule which mandates banks to verify the identities of beneficial owners of legal entity clients. These include corporations, LLCs, partnerships, unincorporated non-profits and statutory trusts. Beneficial owner information is necessary for an individual. This is applicable for individuals with an ownership stake of 25 percent or more equity interest.

If you’re a beneficial owner of a legal entity, the following personal information must be furnished that includes:

• Full legal name

• Date of birth

• Current residential address

• Social security number (SSN) or other government issued identification number for US citizens

Banks and other financial institutions must procure this information. This is because it’s a regulatory compulsion. It attempts to prevent, detect and report money laundering and terrorist financing activity.

For instance, while opening a new account and collecting key KYC information, a bank may find through open source record checks that an individual/business had defrauded innocent investors previously, or was part of a global criminal network. This information may hint that this potential client could be an elevated money laundering risk.

Europe:

Over the past few years, there have been several high-profile cases of alleged money laundering. These have increased the attention of the general public and regulators alike. This has subsequently been a result of the penetration of illicit funds and fraud into European societies. Existing AML requirements are continuously adjusted to better prevent such tactics.

The evolution of customer expectations is adding higher imposition on organizations. Delivering seamless, fully digital and mobile experiences is becoming compulsory. The unprecedented situation that has been inflicted by the coronavirus pandemic in 2020 is an added setback. This is also setting new standards on the pace of digital transformation in KYC compliance.

To address these challenges, the EU has introduced a number of more stringent financial regulations over the last few years. This is to potentially tighten the enforcement powers across the bloc. — the European Commission’s Action Plan released in May 2020.

The extensive penetration of money laundering practices can be seen in European societies. News stories such as the Panama and Paradise Papers is critical in this context.

A number of regulations have been mandated to address the general issues. This is done on the basis of the challenges which the financial sector had undergone for the previous ten years. In particular:

  • The Fourth, Fifth & Sixth Anti-Money Laundering Directive (AMLD4, 5 & 6) are aimed at counteracting the extensive penetration of money laundering in the societies. This can be done by introducing more thorough checks. Moreover, better cooperation between countries, as well as harsher criminal liabilities are crucial.
  • The Payments Services Directive (PSD2) entices customer-centric innovation in the banking world. The focus is on preventing payment fraud and misuse of electronic financial tools;
  • The updated Markets in Financial Instruments Directive (MiFID II) is another important regulation. It is driven by the necessity for more transparency in financial investment operations;
  • The General Data Protection Regulation (GDPR) was the EU’s response to the general public’s request. It was passed to regain control over personal data and identity.

KYC Methods In CASA For Banks

For framing KYC policies, banks must follow the RBI guidelines. Every bank, has to consider the following major aspects:

a) Customer Acceptance Policy–

To make sure that explicit guidelines are applicable to the acceptance of customers.

b) Customer Identification Procedures–

To efficiently identify the customer. This helps to verify his/her identity. This can be done with reliable, independent methods of documents, data or information.

c) Monitoring of Transactions– This policy observes the standard activity of the customer. It can then mark transactions that fall outside the regular pattern of activity.

d) Risk management– Establish appropriate protocols as well as implicate their effective implementation.

As part of the Know Your Customer policy, a Customer/user may be defined as:

  • A person or entity that possesses an account and/or maintains a business relationship with the banking institution
  • The person on whose behalf the account is maintained (i.e. the beneficial owner)
  • Beneficiaries of transactions which are carried out by professional intermediaries. These can be stockbrokers, Chartered Accountants, or solicitors etc.
  • Any person or entity involved with a suspicious financial transaction. This can have significant impact on reputation or other risks to the banking institution. For instance, a wire transfer or issue of a high-value demand draft as a single transaction.

Going paperless — Digital KYC verification

The immediate benefit of a paperless form of KYC is the decreased costs for performing KYC. Video KYC brings in the additional benefit of being completely remote. This is because digital KYC still requires a visit either to the customer’s doorstep or a touch point.

Video KYC in particular thus presents a significant advantage for achieving scale. It has become a crucial factor in the success of fintech initiatives for financial inclusion. This is primarily because it delivers a cheaper method for achieving compliance even in remote locations.

Several fintech companies have introduced new-age digital identity and authentication technologies. They serve the purpose of KYC compliance. These utilize Artificial Intelligence, Blockchain and cloud-based API technology, among many others. Some of these have already been applied in other sectors, like the use of digital KYC verification to open mutual fund accounts.

The amount of data and related analysis projects a scope for new ways in which the data can be leveraged. Some instances include:

– New age risk mapping

– Using machine learning for false positive screening

– Using robotics for dealing with huge volumes of content and unstructured data

The scope for innovation has huge potential. It is a primary reason why the RBI’s regulatory sandbox has specified a focus on digital KYC technology. For starters, the Reserve Bank Of India should mandate digital KYC to become remote as well.

In the US, KYC started with the introduction of the Banking Secrecy Act (BSA) in 1970. This act was developed to control drug trafficking by keeping an eye on black money transactions. Subsequent AML regulations were developed on the basis of BSA in 2001 in the form of the USA Patriot Act which was implemented in 2003.

Later, following BSA, many other regulators introduced KYC and AML Regulations. This was done on regional and international levels.

Digitization of KYC — Major Amendments In Banking Regulations

As a measure to implement digital KYC verification, the finance ministry as well as RBI has introduced several amendments over the last 2 years. The Reserve Bank of India (RBI) acts as the regulatory authority for banking in India. The amendments also ensure that digital KYC verification  meets regulatory requirements.

  • In May 2019, RBI announced important amendments to the Master Direction on KYC. This included updating its list of documents eligible for the identification of individuals. The KYC details apply to banks and other regulated entities. It helps them understand their customers and their financial transactions better. This, in turn, helps them better manage their risks. As per the RBI notification. banks can carry out Aadhaar authentication/offline-verification of an individual. This can be done only when he/she voluntarily utilizes his/her Aadhaar number as ID.
  • The Ministry of Finance (Department of Revenue) has introduced digital KYC by amending the Prevention of Money-laundering (Maintenance of Records) Rules, 2005. It said in a gazette notification dated 19 August 2019. Digital KYC means capturing live photo of the client. It also captured officially valid documents. It also permits capture of Aadhaar for offline KYC verification. (To know more about the offline KYC rules, click here )
  • In January of 2020, RBI amended the KYC norms allowing banks and other lending institutions to use VideoKYC. This move will help them onboard customers remotely. VideoKYC, which will be consent-based, will make it easier for banks and other regulated entities to adhere to the RBI’s KYC norms. (To know more about VideoKYC norms, click here )

Regulatory Authorities Around the Globe for KYC

The following highlights the major regulators around the world. They develop, recommend and implement KYC and AML compliance around the world:

FATF (Financial Action Task Force) is a global authority. It gathers and analyzes money laundering and terrorist financing data from across the globe. It gives regulatory guidelines based on its findings. It has 190 member countries.

FinCEN (Financial Crimes Enforcement Network) is a bureau of the USA treasury department. It collects the financial transactions data. It uses this data for financial crime mitigation and international level.

FINTRAC (Financial Transactions and Report Analysis Center) is a regulatory authority in Canada. It analyzes the financial crime data and works on the detailed implementation of KYC and AML rules in Canada.

FINMA is a financial regulatory authority in Switzerland. It oversees banks, insurance companies, stock exchanges, etc. The authority oversees KYC/AML regulations. This applies to all the institutions liable for regulatory compliance.

Europol is a EU authority that works on anti-money laundering and mitigation of financial crimes like terrorist financing.

Major updates in Global KYC/AML Laws

Amendments in Canada’s PCMLTFA rules

Canada introduced changes to its KYC and AML regimes to collaborate with the global regulations of FATF. It amended its PCMLTFA rules. FinTRAC, is responsible for the nationwide implementation of these rules. Digital KYC will be conducted in the manner of scanned copies of documents that can be used for KYC verification of the customers.

The USA expanding its Counter-Terrorism Powers

The USA has transformed its KYC rules to combat increasing money laundering and terrorist financing. It expanded its counter-terrorism powers. It now targets international financial institutions around the world. These culprits are responsible for aiding the terrorist groups working in the U.S. Recently it filtered three Korean groups. These are namely, Bluenoroff, Lazarus Group, and Andriel. They were responsible for the global cyber attacks on financial institutions.

UK MLA Amendments

The UK introduced amendments to its KYC and AML regulations to expand on an international level. The Money laundering Act (MLA-2017) allowed UK-based businesses to practice the MLA rules in their international affiliates.

The EU 5AMLD and 6AMLD

The EU introduced its Fifth Anti Money Laundering Directive (5AMLD) in 2018–19. 5AMLD limited the transaction and deposit limit on the prepaid cards. If the card holder will deposit or make a transaction of above EUR 150 the prepaid card provider will have to run KYC and AML on its customers. The amount is EUR 50 for online transactions.

6AMLD is an improved endeavour to normalize AML/CFT regulations in the EU region. 22 predicate offences are provided in the official journal of 6AMLD.

FINMA gave banking certificates to Crypto Banks

FINMA and Swiss regulatory authority issued banking certificates to pure-play cryptocurrency banks. Tight KYC and AML regulations are imposed on these banks.

Real KYC & VideoKYC For CASA

At Signzy, we have developed 2 proprietary Digital KYC products. They offer the perfect solution for onboarding savings and current accounts — Real KYC & VideoKYC. Here are some benefits:

  • ‘Free of Cost’ Process: RealKYC verification is not liable to charge any extra amount to the customer. A company or institution may need to pay automation costs of installing verification systems for the long-run.
  • Faster processing: The RealKYC service is an automated online process. This implies that KYC information can be transferred in real-time and does not require any manual intervention. The paper-based KYC process can be delayed for days and go up to weeks to get verified. Using the RealKYC process reduces this to just a few minutes to verify and issue.
  • Account opening in less than 2 minutes: Signzy’s VideoKYC product is capable of onboarding a new CASA account in less than 2 minutes.
  • End-to-end encryption for VideoKYC: This feature makes all calls made to officials for verification secure, with zero chance of your data being compromised.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

 

Impact Of Blocking and Unblocking Of E-Way Bill Generation Facility On Taxpayers & Transporters

Posted on | by Signzian

The Indian government has introduced new regulations to control the E-Way bill(EWB) generation facility. This move will identify and penalize GST non-filers and evaders. With effect from December 2, 2019, the blocking and unblocking of the EWB generation facility has been implemented on the e-way bill portal.

EWB generation has been deactivated for taxpayers who haven’t filed their returns for the previous two months. In this regard, Form GSTR3B is to be considered (which is filed by normal taxpayers) for the blocking of E-Way Bill Generation. The move is in accordance with Notification #74 which was released on 31st December 2018 to include Subrule ’E’ under Rule 138 of the GST Act.

What is the objective behind blocking e-way bill generation for taxpayers?

According to a report by Economic Times based on GSTN data, around 20.75 lakh GSTINs have not filed their GSTR-3B for September and October months. Moreover, around 3.47 lakh GSTINs (16.7%) of these had transactions for September and October 2019 in the e-way bill system. Taking under consideration the increase in the number of tax defaulters, their ability to generate E-way bill had to be blocked. The tax department is of the opinion that non-filing of returns has been the primary reason for the decline in the GST revenue collection so far.

Blocking of E-Way Bill Generation Facility

Every taxpayer who is registered under GST is required to file GSTR-3B, on a monthly basis. GSTR-3B includes details of sales and purchases made by a business and the final tax payable after claiming input credit.

As per the new rule, when a taxpayer fails to file his or her GST returns (GSTR-3B) for two continuous tax periods, he or she will get blocked from generating an e-way bill. A blocked GSTIN cannot be used for generating an e-way bill. This applies to both consignor or consignee. For example, if a taxpayer failed to file his/her GSTR-3B returns for the months of September and October 2019, his/her E-way bill generation facility would be blocked effective from 2 December 2019.

The new rule also applies to the transporter who will be unable to generate EWB using the blocked GSTIN of the taxpayer.

The blocking of EWB generation will not impact previously generated EWBs in any way.

Unblocking Of E-Way Bill Generation Facility

Unblocking of e-way bill generation facility restores the facility of generation of E-Way Bill. In the event of filing of the return for the default period(s), the default period is reduced to less than 2 consecutive tax periods. This is in respect of such taxpayers GSTIN (as Consignor or Consignee),

For updation of his/her status the taxpayer can visit the EWB portal. Select the option ‘Search <Update Block Status’. Enter their GSTIN and use the Update Option to get themselves unblocked on GST portal. This applies only when GSTR-3B return has already been filed for the default period(s).

EWB generation facility can also be restored by the jurisdictional tax official. This can be done on the basis of manual representation by a taxpayer. The tax officials will issue an online order on the GST Portal, for accepting or rejecting such requests of the taxpayers. In case he accepts the request, the facility will get restored.

Taxpayers will usually receive an Email/SMS of acceptance or rejection will be sent to taxpayer on email ID/mobile number. In order to view the status of the order issued by the tax official,taxpayers can login to the GST Portal. Using their GSTIN, the user can go to Dashboard>Services>User Services> View Additional Notices/Orders.

The Unblocking of EWB will be valid till the period indicated by the tax official in his/her order. The GST Portal will send a reminder to the taxpayer about 7 days before the expiry date via mail/SMS.

Impact Of Blocking/Unblocking EWB Generation On Transporters

Transporters who are enrolled on the EWB portal but not registered on GST portal will not be impacted in any way. This is because they are not required to file GTR3B returns.

If the GSTIN of the transporter registered under GST portal is blocked, that GSTIN cannot be used. This rule applies to Consignor, Consignee or transporter while generating EWB or updating transporter details.

In case an EWB was generated before blocking, the transporter can also update the vehicle and transporter details. He/she can carry out the extension in validity period of these EWBs if required.

Impact On Taxpayers Who Are Blocked From EWB Generation

Not generating an e-way bill will be considered as an act of non-compliance as per the provisions of the GST law. In such a case, the business may be prevented from delivering goods without an e-way bill.

When goods are transported without an e-way bill, the authorities can claim that the consignor of the goods has made an attempt to evade taxes. A subsequent levy a fine equal to the tax amount is payable in such case. Such commodities and the vehicle transporting them can be seized or detained. Both the goods and the vehicle may be released upon successful payment of the pending tax amount and the penalty mentioned by the concerned officer.

The absence of an e-way bill during transportation of goods can lead to the disruption in the day-to-day operations. It can also hamper delivery of goods for a business. This move by the government is intended to push taxpayers to be more compliant and make sure they file their returns/make their tax payments on time.

Businesses need to approach with caution by filing their GSTR-3B within the deadline. Doing so ensures that there is no disruption in their business-related operations. This new modification to the e-way bill system may effectively improve GST revenue collection.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

 

Digital KYC

Digital KYC: Transforming Credit Card Onboarding

Posted on | by Signzian

Digital KYC, with its innovative approach to customer verification, is ushering in a new era for credit card onboarding. By marrying state-of-the-art technology with traditional Know Your Customer procedures, it promises a more efficient, rapid, and secure experience for both financial institutions and their customers. This transformative tool not only optimizes the application and approval processes but also bolsters trust and regulatory compliance. As we venture further into the digital age, the profound influence of Digital KYC on reshaping the credit card landscape becomes ever more apparent. Join us in exploring this remarkable shift in the financial sector.

The financial services marketplace is extremely competitive. As such, acquiring new credit card customers is never easy. The task of successful customer onboarding is often even tougher. Many documents around company credentials and financial statements need verification. The KYC onboarding process is required to meet complex regulatory requirements.

The nature of the documents required for KYC onboarding of a new credit card application can be complex. This often leads to interactions between the sales teams and the customer. Getting the correct documents to complete the KYC onboarding often causes unexpected delays. This leads to poor customer experience and a loss of revenue for the company. Another important aspect is a lack of digital automation in the KYC onboarding process. This leads to longer onboarding cycle times. The resulting delays negatively impact customer experience. The subsequent outcome is a loss of revenue for the card company. This is because customers cannot be charged until they start using their cards.

Challenges For Customer Onboarding For Credit Card Applications

An article by FintechFutures highlights the Forrester Consulting survey. It predicts that on average, clients are contacted ten times during the KYC onboarding process. The clients are asked to submit between five and up to a hundred documents. Also, it costs up to $25,000 per client, with the average cost calculated at $6,000 per new client. The following are the challenges of the current process:

The lack of structured process

KYC onboarding needs to follow different processes. This can be across departments such as credit, legal and operational. The tricky part is that every compliance officer (or compliance department) might have their own interpretation of regulations. Thus, they end up having their own process specific to their own department/entity within the bank. It also means that they will have three different interpretations of regulations/processes. Moreover, customers are likely to get confused on why they need to provide the same information at several points of the process. This information can be duplicated in nature for several different parties.

Changing regulations

In today’s world, KYC regulations are changing on a monthly or weekly basis. Hence, banks need to adapt their systems accordingly. They need time to explain to the client why new changes are happening. They must also ensure that the changes are amended in the KYC digital onboarding process. Due to endless regulations, banks need to re-visit current operations/processes. They must now rely on new technology initiatives. For ex: process reengineering, digital transformation etc to make themselves compliant.

Culture

Financial institutions always tend to have a close relationship with their clients. Underinvestment in strategic opportunities (such as KYC onboarding) is still missing. This is along with the drive to understand customers changing needs and market dynamics. McKinsey conducted a recent survey among the global executives across the world. In the report, culture accounts for 33% among the most significant barriers to digital effectiveness.

Access

With modern technology, banks are getting increasing pressure to do everything on a real-time basis. For example, a customer expects that everything needs to be available on mobile. This can help them avoid visiting the branch and accessing the app from anywhere at any point. Modern banks are still using legacy systems. This leads to a challenge in providing customers with an end-to-end digital experience. With advancements like robotic process automation (RPA), banks can easily overcome this hurdle.

Time-consuming processes

The entire process of KYC onboarding can be very time-consuming. This is due to the vast number of documents needed, multiple touch points and departments involved in the process. Also, it changes for every entity within an organization. For example, a bank has three different entities: corporate, retail and insurance businesses. These can cater to different types of businesses/customers.

Quality

As per PwC, the remediation exercise of the customer has shown that due diligence process varies from each and every entity, from country to country. Thus, the quality of the experience can vary to a very large extent within one financial services entity. So if a customer visits the same bank in Singapore and India, their KYC onboarding experience will vary. I understand a lot of processes are country specific, but that is something which needs to be addressed.

The Need For Speed In Digital Onboarding

Onboarding digital banking customers is a real pain point for banks offering credit cards. This affects user experience by a great deal. Banks heavily invest in attracting new customers. They also talk to existing clients for additional facilities. The challenge here is that with product application workflows are slow and complicated. Another factor is that a poor KYC onboarding process can seriously undermine these efforts.

  • According to a Marketforce survey, onboarding a new customer takes less than 10 minutes at 32% of incumbent banks. However, it still requires more than 24 hours at 19% of financial institutions.
  • Almost 39% of respondents can’t even onboard entirely on digital channels.
  • An astonishing 40% of banking consumers abandon their application, according to a survey by Signicat.
  • Approximately 39% give up because the process drags on too long, while 34% drop off because too much personal information is required.

This calls for an efficient, digital KYC onboarding which not only provides efficiency, but also speed. Simply taking the process online is not the only contributing factor to this. Most customers require an experience like Netflix or Uber — where efficiency as well as time coalesce.

Fighting Frauds With Digital KYC onboarding

E-commerce fraud is becoming more and more widespread and sophisticated. It is a concern for online retailers around the globe. This risk exists because it can be difficult to verify the identity of who is using the card in an online setting. Asking for the card security codes (the 3–4 digit code features on the back of credit and debit cards) is a good preventative measure. Unfortunately, it isn’t always enough.

  • In a survey by Experian, 63% of US businesses reported fraudulent losses in 2018.
  • Reports from Juniper Research that online retailers are set to lose an estimated $130 billion between 2018 and 2023 in digital card-not-present (CNP) fraud.
  • A study by Javelin Strategy & Research in 2018 showed that CNP fraud is 81% more likely to occur than “card-present” in-store credit card fraud.

In its most general terms, credit card fraud refers to a fraudster making a transaction with an online business. This can be done through illicit means mostly by:

  1. Stolen credit card information
  2. Stolen ID
  3. Fake credit card details

The preferred and most convenient way to prevent this is KYC. Many banks, insurance companies, and other types of financial institutions have a KYC onboarding procedure in place. This ensures that their customers and clients are who they say they are. It also helps these institutions to get to know their customers. The companies can also verify whether clients are involved in any illegal activities. Ex: money laundering or bribery.

Implementing the KYC onboarding process stops online fraud before it can happen. It typically involves providing one or more documents to the institution that confirms their identity. These documents can include:

  • Government ID
  • Drivers License
  • Passport
  • Aadhaar Card

In addition, KYC verification compares the collected data against several AM/CFT databases. It also conducts checks for forged documents and bogus information. This makes KYC onboarding the perfect tool for combating frauds.

Make The Plastic Fantastic — Digitizing The Credit Card Application process

Competition is fierce when it comes to credit card issuing. Many of the traditional approaches to differentiation are losing effectiveness. Interest rates have evened out across cards. Large issuers continue to capture a bigger share of transactions. However smaller issuers are gaining market share in outstandings by bringing portfolios back in house and developing highly targeted customer-management campaigns.

From customer acquisition to onboarding to payments, the digital channel is becoming the most effective way to engage cardholders. It enables issuers to enhance the customer experience. It also helps set the stage for the use of big data and advanced analytics techniques. This can help improve decision making.

  • McKinsey research highlights that clients are willing to engage digitally, and often start their journey via digital channels.
  • More than 80% of US-based customers research credit cards online before acquisition.
  • More than 25% customers get personal recommendations via social networks to keep them updated on purchase decisions.
  • About 28% of credit card sales are made through digital channels, and two-thirds of the clients activate their new cards online.

Two major areas to be covered for digitizing customer experience are:

  • Customer acquisition, which specifically involves converting clients from consideration to the application phase. It includes getting them through the approval process in the real-time digital surroundings.
  • Customer onboarding after an application for a credit card is approved. From the customer’s point of view, the days that follow are either full of pain points or lacking in any kind of contact with the issuer that might help cement the new relationship.

Digital KYC Onboarding for Credit Card Application Process  — The Game Changer

The first step in building a relationship with a new client is enhancing the application procedure to be simple, seamless, and quick. The fewer the fields to complete, the faster the application. For example, applicants can enter their demographic information via their smartphone camera. This can be used for verification through facial recognition. Some issuers have managed to cut completion times by up to a third. They have also raised completion rates by more than a quarter. In addition, an increase in digital applications by 40% is acheived by simplifying the application process.

The second step involves engaging new clients so they use their card early and often so that usage becomes a habit. For example, In India, most credit cards require holders to spend a particular denomination in the first 90 days to qualify for reward miles. An analysis by McKinsey shows that the long-term value of a client is up to 3x greater when they are engaged frequently in the first 90 days. However, many issuers assign only about a fifth of their marketing budget to this critical time period.

CoronaVirus Crisis — Issuing Credit Cards Online

From the start of the Covid-19 lockdown, loan and card issuers have come to a grinding halt. This is mainly because both require representatives to visit the applicant for paperwork. The resultant decline in business has forced lenders and card issuers to focus on digital lending.

There are plans in motion for users to issue credit cards while sitting at home, with zero paperwork. On approval, the funds will be credited directly into your bank account or the card will be sent to your address.

According to Livemint, the intermediaries, banks and other financial institutions are requesting the regulator and the government to encourage banks to use the Central KYC (CKYC) and Aadhaar-based KYC.

There are also talks of VideoKYC being used for digitizing issuance of credit cards. As per the RBI notification, when lenders are doing V-CIP, an official needs to be present on the other end for verification. The client has to furnish documents to the official over the video during the procedure. Also, it’s a real-time process that needs to be recorded and stored. Further, the online process eliminates the requirement of physical signature. The same process can be applicable for card issuance.

The New Age KYC Technology By Signzy

Signzy offers a unique AI-based electronic KYC solution called RealKYC. It is a comprehensive suite of micro-services that offers smooth onboarding of new applications for credit cards. It also offers risk management and fraud mitigation.

Signzy has also launched its unique VideoKYC solution for real-time verification. This can be done remotely. VideoKYC strictly maintains compliance with RBI and SEBI guidelines. It is a secure, hassle-free tool for onboarding.

Here are 3 major benefits that RealKYC :

  • Hassle-Free Application Approval: When a new application is received for a credit card, it has to be approved by several officials. It undergoes severe scrutiny before the application moves to the back end for processing. With RealKYC, there is no need for back and forth. This is because multiple checks can be performed by officials simultaneously. This makes the process efficient and hassle-free.
  • Credit Checks: Signzy’s unique set of APIs perform comprehensive credit checks against the applicant. This is done to check for worthiness, past default details and so on. which could lead to potential credit risks if the applicant is approved.
  • Background Checks: Real KYC performs in-depth background checks of the credit card applicant. This may include cross-referencing the applicant against multiple AML/CFT databases, negative checks against registered court cases, etc.
  • Real-Time PAN verification with VideoKYC; Signzy’s VideoKYC solution offers real-time PAN verification. This helps authenticate the originality of the document. It also conducts background credit checks against the PAN number.
  • No Photocopies: With VideoKYC, just show the original ID proof and the official on call can take the snapshot as part of KYC proof.

About Signzy

Signzy is a market-leading platform redefining the speed, accuracy, and experience of how financial institutions are onboarding customers and businesses – using the digital medium. The company’s award-winning no-code GO platform delivers seamless, end-to-end, and multi-channel onboarding journeys while offering customizable workflows. In addition, it gives these players access to an aggregated marketplace of 240+ bespoke APIs that can be easily added to any workflow with simple widgets.

Signzy is enabling ten million+ end customer and business onboarding every month at a success rate of 99% while reducing the speed to market from 6 months to 3-4 weeks. It works with over 240+ FIs globally, including the 4 largest banks in India, a Top 3 acquiring Bank in the US, and has a robust global partnership with Mastercard and Microsoft. The company’s product team is based out of Bengaluru and has a strong presence in Mumbai, New York, and Dubai.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Signzy

Written by an insightful Signzian intent on learning and sharing knowledge.

 

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